Hi everyone. J.G. Wentworth here.
Chances are when you need cash you need it fast. There are plenty of places you can go, but they’re all different in terms of how quickly you can get the money you need, and the terms you can get it on. I’ve covered many of these sources of cash right here on my blog. Some of them include: credit cards, your 401(k), bank loans, friends and family and even rent-to-own stores.
One we haven’t covered so far is selling your stock market investments such as stocks, bonds and mutual funds. So, here goes . . .
Positives:
· Generally, when you sell stocks, bonds and mutual funds, you can access your money within a very short period of time, sometimes in as little as three days or less.
· You can sell these kinds of assets quite easily, generally with a single telephone call, or very quickly on a computer.
· There are very few costs associated with selling stocks, bonds and mutual funds. Commissions at many brokerage firms are now less than $10.00.
· When you sell stocks, bonds and mutual funds, you can sell very precise amounts that exactly match the amount of cash you need.
· The sale you make to raise the cash you need might be far less than the amount of money you have made on your investment, especially if it has grown over time.
Negatives:
· Many people do not own stocks, bonds or mutual funds.
· If you sell investments at a profit there are very likely tax consequences from the sale that ultimately will decrease the amount of cash you use.
· If your investments are growing, selling some or all of them will reduce the amount of money you could make by simply holding onto them.
· If your stocks, bonds or mutual funds are inside of an IRA, and you sell them to use the cash, you could face penalties for taking out money earlier than specified by law.
· If you own several stocks, bonds and mutual funds, deciding which one to sell can be difficult.
Compared to Selling Structured Settlement Payments
The interesting thing about stocks, bonds and mutual funds compared to structured settlement payments is they are both assets owned by you. Though they are very different assets, using them to raise cash keeps you from going further into debt. That aside, what are the differences?
· When you sell structured settlement payments, you are not taking away the possibility of missing out on the future growth of stocks, bonds and mutual funds.
· When you sell structured settlement payments, there are generally no tax consequences. The amount of payments you sell is the amount of cash available for you to use.
· If you are just starting out, the value of your investments might be very small in comparison to the present value of your structured settlement payments.
Overall, I think if you can afford to sell structured settlement payments – that is, you can afford to part with some or all of your regular payments – selling them might be a better way to go. The value of investments grow over time, while that value of structured settlement payments tend to diminish over time. If however, you need cash this week, and you have investments in the market, selling some or all of them may be your only choice.
*This blog post is not a recommendation for a specific course of action. Consult with your tax or financial advisor first.